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Market Capitalization

Market capitalization refers to how much a company is worth as determined by the stock market. It is defined as the total market value of all outstanding shares.

To calculate a company’s market cap, multiply the number of outstanding shares by the current market value of one share.

Companies are typically divided according to market capitalization: large-cap ($10 billion or more), mid-cap ($2 billion to $10 billion), and small-cap ($300 million to $2 billion).

Market cap is often used to determine a company’s size, then evaluate the company’s financial performance to other companies of various sizes.

In investing, companies with larger market capitalization are often safer investments as they represent more established companies with generally longer history in business.